The FLRA's "Covered-By" Cover-Up (Part Two)
Friday, November 13, 2009
"The scope of an agency's obligation to bargain over changes in conditions of employment is a fundamental labor relations issue, and the Authority owes unions and agencies clear rules that are easy to apply."[1]
Yesterday, Part One of this analysis reviewed just how clear and easy to apply the "covered-by" doctrine is by looking at the guidance the FLRA and courts have given practitioners.
Statutory Conflicts-But, it is not just the words of the case law that confuse practitioners. The concept itself seems to clash with some very fundamental principles of collective bargaining. For example,
- An employer must provide specific and adequate notice to the union if it wants to change past practice, not just some "passing reference." However, if the general subject-matter of the change meets the covered-by criteria, the employer need not provide ANY notice. For example, if the current term agreement has a detailed clause addressing reassignments, can the agency suddenly create overseas offices and start reassigning employees there without notice and bargaining? If so, why should not employers stockpile changes until just after a new term contract is signed and roll them out without any bargaining because the term contract makes some reference to the same subject matter?
- All agreements must be in writing and all agreements are subject to agency head approval, but if the matter is "inseparably bound up with something in the contract" that agreement need not be put in writing nor submitted for approval.
Contract Drafting Problems-Another practitioner frustration bearing on the viability of the "covered-by" doctrine is that we like to know just what we are agreeing to when we sign an agreement. For example, consider these four different contract provisions about changing office floor plans.
- The Union waives its right to bargain floor plan changes.
- If management proposes a floor plan change, it must be fair and equitable plan.
- Management will provide fair and equitable work space for employees.
- When management changes floor plan, it will preserve the same amount of individual office space, break room space, and IT capabilities that employees had before the change.
I know that the first permits the employer to make virtually any kind of floor plan change without bargaining; it is a waiver. I worry that the second might create a "covered-by" defense, even though all I think it does is require that the employer's proposed plan be "fair and equitable" when presented to the union for negotiations. It does bar the union from negotiating for something more than fair and equitable.
The third worries me even more because it does not address proposed plans, but the space ultimately provided. That suggests that the union gave the employer freedom to unilaterally implement floor plan changes so long as the implemented plan was fair and equitable. Its only recourse is to grieve. In fact, I believe the odds are against the union having a right to bargain midterm over floor space change under #3, but I say that without any confidence that I am correct.
The fourth triggers a different reason to worry. The parties just may have intended to get the listed issues out of the way via the term contract so that they could more quickly address other potential aspects of a specific change when all the details become known, like lighting, window space, the need to share workstations, noise and ventilation. But there is covered-by case law suggesting that an arbitrator, FLRA, or a court can decide that so much is already covered in the contract that he, she or they think that there has been enough bargaining.[2]
Stability and Repose-The D.C Circuit continues to push the "covered-by" doctrine because it sees it as the path to "stability and repose" in the collective bargaining relationship. But, in reality, it has triggered a tsunami of litigation. When I searched www.feds.com for the keyword combination of "covered-by" and "47 FLRA 1004," it identified over 100 FLRA/FSIP decisions since 1993 in which those terms were involved. So much for stability and repose.
That should not surprise practitioners. They know that the doctrine has encouraged employers to take more risks by refusing bargaining requests because their odds of winning have increased. Practitioners also know that each time the employer decides to take the risk it hands the union a situation in which the union has nothing to lose by challenging the employer and a lot to gain if the union win, e.g., remedies such as back pay,[3] status quo ante orders, attorney fees, management embarrassment, postings, cease and desist orders, etc.
Stated differently, while the 1992 court saw a situation that it thought was unfair to employers, at least employers knew then with high certainty that they had to bargain when they made changes. Consequently, they bargained over the specific change or they bargained at the term table for waivers or they urged the FSIP to rule against the union's demand on the grounds that the current contract language provides enough rights for employees. The court replaced that with uncertainty for all parties and shifted bargaining table work to the FLRA and courts for adjudicatory work.
The NLRB's Position-Despite the D.C. Circuit's pressure on the NLRB to adopt the same approach to determining whether there is an obligation to bargain, the Board remains steadfastly defiant.[4]
This case presents us with the opportunity to explain and reaffirm our adherence to one of the oldest and most familiar of Board doctrines, the clear-and-unmistakable waiver standard, in determining whether an employer has the right to make unilateral changes in unit employees' terms and conditions of employment during the life of a collective-bargaining agreement. The clear-and unmistakable waiver standard is firmly grounded in the policy of the National Labor Relations Act promoting collective bargaining. It has been applied consistently by the Board for more than 50 years, and it has been approved by the Supreme Court. NLRB v. C & C Plywood 385 U.S. 421 (1967). By contrast, the contract coverage approach, urged by the Respondent and endorsed by the dissent, is a relatively recent judicial innovation, adopted by two appellate courts. In the framework established by Congress, however, it is the function of the Board, not the courts, to develop federal labor policy. See, e.g., NLRB v. J. Weingarten, Inc., 420 U.S. 251, 266 (1975).…There can be no dispute, then, that the Board's traditional waiver standard is exceptionally well established. The venerable age of the standard, coupled with its approval by the Supreme Court, makes a powerful case for stare decisis. . . .As the Board explained in C & C Plywood, supra, granting an employer the right to act unilaterally with respect to employment terms that are subject to bargaining under the Act "is so contrary to labor relations experience that it should not be inferred unless the language of the contract or the history of negotiations clearly demonstrates this to be a fact."… Changing to a "contract-coverage" standard would very likely complicate the collective-bargaining process and increase the likelihood of labor disputes.
While the Authority chose in 1993 to adopt the perspective of the D.C Circuit, it is time for the FLRA to look at it from the perspective of the practitioners who need clear, easy to apply rules. This is especially so given that the FLRA has had to repeatedly correct its own ALJs for misapplying them?[5]
The Authority should line up with the Board, and assert its well-recognized right to set bargaining policy which the Supreme Court recognized in 1999.[6] Ironically, Members Calhoun and McKee probably had it right in their 1988 decision which the 1992 D.C. Circuit three-judge panel criticized. Their reading of the law was far clearer and easier to apply than we have today, e.g., there was no "inseparably bound up with" test for everyone to divine with our dowsing rods, it aligned with the NLRBs reading of the law as well as the Supreme Court's, and it left the employer with little incentive to take risks and build up potential liabilities.[7]
Conflict with or Modify and Clear and Unmistakable Waiver-I agree that neither party should be permitted to reopen an agreement during its term to change its explicit wording, e.g., changing the "five days" in the following clause to "ten days" or even three: Employees will receive five days notice of a final decision to suspend before the suspension is implemented. But shouldn't either party have the right to reopen the agreement to define "days" if it finds there is a dispute over whether it means calendar or work days? Why should arbitration be the only recourse if parties truly never thought about it when they wrote the clause?
Now imagine that after they renegotiated and settled on the following midterm rewrite: "calendar days, but not to include holidays." But, a week later management suddenly found it necessary to furlough everyone for a week each month to stay within budget—and that had never been done before in this unit. Should the union be barred from bargaining over whether furlough days count as calendar days? Or is it better to force the parties to have an arbitrator decide for them where "furlough days" fit within the revised clause of "calendar days, but not to include holidays?" Under today's covered-by doctrine, it is anyone's guess whether this demand would be considered to be inseparably bound up with.
Take it another step using the same facts immediately above, but further assume that management refused to bargain because it believed the bargaining history shows the union no longer had its right to make that demand. Bargaining history could include any of many fact patterns:
- the union made a demand in the prior negotiations that excluded furlough days from calendar days, but it dropped it from the conversation after the first day of bargaining and without explanation;
- the union made a demand in the prior negotiations that excluded furlough days from calendar days, but dropped it in return for management's agreement to exclude holidays;
- the union made a demand in the prior negotiations that excluded furlough days from calendar days, but dropped it after management said it never had furloughs before and it never will;
- the union never made a demand in the prior negotiations to exclude furlough days from calendar days, but the parties talked about furloughs days and someone on the management team told the union that it could reopen negotiations if the agency ever furloughed;
- no one ever talked about furlough days, but everyone knew during negotiations that the agency was highly likely to use furloughs to get through the fiscal year; or
- it was never discussed in formal the negotiations but two years ago the agency head told the union president that if the agency ever had to furlough the union could reopen anything in the term contract even remotely connected to furlough.
I could go on listing different permutations of the bargaining table discussions that could have occurred, but the point here is how to provide a clear, easy to apply rule to guide the parties through this situation.
Today, it is almost anyone's guess as to how three particular FLRA members or three particular judges will adjudicate each of those six fact patterns. Prior to the 1992 D.C. Circuit court decision, management would have known that only situation #2 was a sure waiver and every other fact pattern meant it had to bargain. But at least management had that certainty. And given that certainly, it knew that it had to solve this problem at the term bargaining table using its considerable bargaining power and leverage to try to limit its bargaining exposure through zipper clauses or mini-zippers, detailed contract language that anticipated all reasonable developments, expedited bargaining to deal with mid-term demands, disincentives for the union to reopen, FSIP arguments, etc.
In 1987 the D. C. Circuit gave the FLRA this advice, which FLRA also could rely upon to return practitioners to clearer and easier to apply rules, i.e., the waiver test.
In view of the absence of any statutory distinction between midterm and basic negotiations, it is clear that Congress intended that management prerogatives be preserved through this comprehensive system of subject matter protection, rather than through implied restrictions on the collective-bargaining process. Nevertheless, the Authority asserts that a distinction must be made between midterm and other agreements because midterm bargaining would undermine reliance on the basic agreement, and encourage fragmentation of the collective-bargaining process. At the same time, the Authority has clearly announced its understanding that employee representatives must bargain over all lawful midterm proposals by management, not only those required by law or within the statute's explicit management rights. There is nothing inherently threatening to management prerogatives, however, in allowing midterm bargaining by the union. To allow management to retain the right to raise new issues, but to deny the right to the employees' representatives would produce an inequality in bargaining power without express statutory support or strong policy justification. To limit the right of the union in midterm bargaining would provide management with an unwarranted advantage which would violate a guiding purpose of the statute. NTEU v. FLRA, 810 F.2d 295 (1987)
I agree that the waiver test has its own ambiguous criteria, e.g., clear and unmistakable, consciously explored, fully discussed, etc. But, it also allows intrinsic and extrinsic evidence to be examined as the covered-by test does today and by setting the burden bar high the waiver test discourages agency risk and pushes the problem, if any, to the bargaining table to be resolved without retroactive liabilities.
[1] Customs Service, and NTEU, 59 FLRA 703 (2004).
[2] "To be sure, neither Article 16 nor Article 31 "specifically address[es] the full range of impact and implementation issues" that might conceivably arise, id. at 1133; but, as we have explained, such a standard is both unrealistic and impermissible." Marine Corps, Albany, GA, v. FLRA, 962 F.2d 48 (1992)
[3] DOE, Western Area Power Admin., CO and AFGE, 56 FLRA 9 (2000) (FLRA ordered a terminated employee reinstated with back pay for about a two year period because the agency thought it had a covered-by defense when it did not.)
[4] Provena Hosp., d/b/a Provena St. Joseph Medical Ctr. and Illinois Nurses Ass'n, 350 NLRB No. 64 (2007).
[6] "The specific question before us is whether an agency must bargain endterm about including in the basic labor contract a clause that would require certain forms of midterm bargaining. As is true of midterm bargaining itself, and for similar reasons, the Statute grants the Authority leeway (within ordinary legal limits) in answering that question as well. NFFE and FLRA v. Dept. of Interior, 526 U.S. 86 (1999)
[7] While the FLRA recently held that the "inseparably bound up with" criterion can be bargained away because it is not a right vested in the Employer by statute, dropping it altogether will simplify the lives of all practitioners. NTEU and U.S Customs, 64 FLRA No. 22 (2009)
© 2010 Frank Ferris. All rights reserved. This article may not be reproduced without express written consent from Frank Ferris.
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